FedEx Operates a Tightly-Coupled, Centralized

FedEx operates a tightly-coupled, centralized system. Although the different components of the system are widespread geographically, they are tightly coupled by virtue of their intense level of interdependence. There is little independence as each component of the system relies on each other component on a daily basis, for the movement and tracking of packages and the provision of customer service functions. FedEx is a highly centralized organization as well, the result of the need for operational consistency across the system. Thus, each individual component has limited autonomy. Decisions with regards to systems function are generally made in Memphis, including decisions with respect to aircraft (resource allocation), marketing campaigns and the sales and service functions with respect to large accounts. The primary role of the different components of the system is to execute, rather than to innovate or initiate.

The change process is therefore slow. The centralized planning process and slow diffusion of ideas and technology result in multi-year timeframes for relatively simple updates such as modernizing the tracking devices that the couriers use (Hesseldahl, 2002). When the PowerPad was announced in 2002, it was expected to be rolled out across the company by the summer of 2003; in fact it took several more years. FedEx initiates the change process from its head office as the first step. The design of the change is made, and the implementation plan is then communicated to each regional station. The stations do not set their own implementation plans, but rather follow instructions sent from head office. When the change involves new training, this is also handled from head office. This high level of centralization can at times bog down the change process at FedEx but it also allows for the consistency across the company that is required in such a tightly-coupled system.

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